Question
Lazare Corporation expects an EBIT of $18,100 every year forever. Lazare currently has no debt, and its cost of equity is 16%. The firm can
Lazare Corporation expects an EBIT of $18,100 every year forever. Lazare currently has no debt, and its cost of equity is 16%. The firm can borrow at 11%. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)
a. If the corporate tax rate is 35%, what is the value of the firm?
Value of the firm $
b. What will the value be if the company converts to 40% debt?
Value of the firm $
c. What will the value be if the company converts to 100% debt?
Value of the firm $
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Financial Liberalization And The Direction Of Capital Flows
Authors: Onur Ozdemir
1st Edition
3659813370, 978-3659813375
